🔒CT’s $75M Manufacturing Innovation Fund runs dry as industry’s needs grow

A state innovation fund that underwrites key manufacturing industry programs has run dry, raising concerns over how to continue initiatives designed to grow and train Connecticut’s manufacturing workforce, which is under intense pressure from the economic fallout of the coronavirus pandemic.

Connecticut’s $75-million Manufacturing Innovation Fund was created in 2014 to pay for programs — like apprenticeships and incumbent worker training — aimed at growing jobs and helping the sector deal with a major workforce shortage.

Now, only $2.5 million remains, and all of that money has already been allocated, causing top industry leaders to urge lawmakers to replenish the fund.

The state legislature was poised to take up the issue this year, before COVID-19 forced the 2020 legislative session to end months early.

With the state economy and finances in disarray, it’s unclear if and when lawmakers will be able to save the fund going forward.

“I don’t think any of us are under the illusion that getting anything will be easy,” said Colin Cooper, Connecticut’s chief manufacturing officer, an official state government position. “I don’t think it’s realistic to think that we’ll have an agreement on [funding the MIF] in the short [legislative] period between now and the end of the year.”

Manufacturers across the state have cited workforce development initiatives like apprenticeships and incumbent worker training, as well as the Manufacturing Voucher Program — a matching state grant of up to $50,000 for equipment purchases and other investments — as critical to the sector.

“The Manufacturing Innovation Fund has been a really integral part of manufacturing success since its inception,” said Kelli-Marie Vallieres, an MIF board member who is also CEO of sister companies Sound Manufacturing and Monster Power Equipment in Old Saybrook. “[My companies] have utilized the voucher program, and did the incumbent worker training program.”

For now, Cooper said he and others are doing their best to find available money to fund programs most important to the industry, as manufacturers and policymakers say the state shouldn’t lose focus on a sector that could help lift Connecticut out of a coronavirus-induced recession.

For example, the state has redirected $5 million from the Manufacturing Assistance Act — which provides loans for infrastructure projects and other investments — to the Manufacturing Voucher Program, Cooper said.

Some of that money has gone to manufacturers assisting in the production of critical COVID-19-related equipment and supplies.

But it’s not a long-term fix, he added.

“I think the needs are as great as I’ve ever seen them, and the resources are under great strain,” Cooper said.

Center stage

The voucher program isn’t the only MIF-supported initiative critical to manufacturers, industry leaders say.

Vallieres, who also serves as co-chair of the Governor’s Workforce Council, said workforce development programs are also critical to the sector, which accounted for 153,400 jobs in Connecticut at the end of May, according to the state Department of Labor.

“Manufacturing has kind of taken a center stage because it is one of the largest economic industries in the state, and we contribute a lot to the economic stability of the state,” Vallieres said.

A 2019 Connecticut Business & Industry Association survey found that 60% of in-state manufacturers ranked recruitment, retention and hiring qualified staff as their most immediate and significant needs, and the number of manufacturing workers set to retire over the next decade will outpace the number of younger people entering the industry.

The fact that some manufacturers are struggling during a time when many residents are out of work demonstrates the need for MIF-supported initiatives like the Step Up program, which subsidizes new employee salaries up to 90% for six months, while that worker is still in training.

Chris Jewell, co-owner of Bozrah metal-fabrication manufacturer Collins & Jewell Co., said his business has used Step Up to hire inexperienced employees who they then trained. Without the subsidy, the company — which employs 92 people — probably would have passed on some good workers because they wouldn’t have taken the financial risk associated with training someone who might not work out.

“I personally think manufacturers saw the most value in Step Up because [the subsidy makes them] willing to stick their necks out further,” said Jewell, who added his company has also taken advantage of the Incumbent Worker Training and voucher programs.

MIF-supported apprenticeship programs are another critical factor in training a new generation of workers, said Jason Howey, president and CEO of New Britain medical-device maker OKAY Industries.

OKAY, which employs about 300 workers in Connecticut, regularly hires apprentices through MIF-supported programs, and currently has four on staff, Howey said. Without subsidies, it would cost the company about $150,000 over four years to train an apprentice, Howey said, making it a costly and risky endeavor.

During a time of financial strain, it becomes more difficult for companies to shell out extra money for training, yet that doesn’t change the manufacturing industry’s workforce development needs, Howey said.

“COVID will end, so you can’t give up on the training aspect,” Howey said. “The problem is becoming more and more difficult because so many people are retiring.”

Chris Nowell, vice president of operations at Berlin medical-implant manufacturer TOMZ Corp. also pointed to state-subsidized training programs as important to growing the industry.

“I think a lot of those programs that are geared toward continuing education are key,” Nowell said. “It’s important to keep the funding for those types of programs to bring in new people.”

Lawmaker’s view

At the legislative level, lawmakers still view the manufacturing industry, including key MIF-funded programs, as a priority, said state Rep. Caroline Simmons, a Stamford Democrat who co-chairs the state legislature’s Manufacturing Caucus.

Simmons said the voucher and training programs are “critical” to workforce development efforts. But with the state staring down the barrel of a $4-billion deficit over the next two years, keeping them afloat will require effort on the part of all stakeholders.

“I still think that supporting our manufacturing industry needs to be a top priority, particularly as we help our economy recover,” Simmons said. “I think that there’s definitely room to continue to collaborate with the private sector. … Fiscal considerations are always a factor, but especially now.”